Asos boosts international growth by over 50 per cent

Internet Retailing

5th Apr 2017

Online fashion retailer Asos received a boost from Brexit, with the weaker British pound lifting international sales by 54 per cent and overall group revenues to £911.5 million in the six months ending 28 February  2017, as compared to the corresponding half 2016.

The UK-based company described the 18 per cent increase in sales at home as “solid”, given the more promotional market.

Asos upped its guidance of year-on-year growth to 30-35 per cent for the current financial year, but kept forecasts for the bottom line unchanged due to pressure on margins.

Analysts expect margins to further weaken in the second half of 2017.

“Given the current momentum we are seeing, Asos is making good progress towards its ultimate goal of becoming the world’s no. 1 destination for fashion-loving 20-somethings,” said Asos CEO Nick Beighton in an earnings statement.

Active customers, average basket value and average order frequency are all up (by 29 per cent, 3 per cent and 4 per cent, respectively), indicating an overall improvement in customer engagement.

The retailer now has over 14 million active users globally and over 5 million in the UK.

Asos has also seen strong results on mobile channel, with daily downloads of its app increasing 28 per cent in the half.

Mobile visits now make up around 70 per cent of total traffic and 58 per cent of orders are placed from mobile device.

Commenting on Asos’s mobile play, Sofie Willmott, senior retail analyst at GlobalData, said competitors should take note:

“Competitors targeting the 16-34 age group should take note that a spotlight on mobile functionality to create a smooth, and enjoyable, shopping journey will drive visitor-purchaser conversion.

“In a period of weak volume growth, retailers must use mobile channels to capitalise on frequent engagement and implement fast and simple checkouts to capture impulse spend.”

Meanwhile, GlobalData research shows Asos is driving spend through its delivery subscription scheme, with 60 per cent of consumers shopping at Asos more often since signing up.

The number of UK Asos premier customers lifted 41 per cent on last year, leading to an 8 per cent rise in order frequency in the UK.

The online-only retailer shipped 23.3 million orders in the six months ending 28 February, a 33 per cent increase from the same period last year.

Asos continues to invest in infrastructure and technology to make its delivery and returns proposition a competitive differentiator.

Eurohub 2, a purpose built fulfilment centre, went live in March, enabling 100 per cent order fulfilment to Germany, France, Spain and Italy, compared to the previous  50 per cent fulfilment levels from Eurohub 1.

The retailer has also continued to strengthen its product offer by introducing new brands, including competitors Miss Selfridge and Burton, while broadening its own label offer into niche product areas such as plus size for men and activewear (due to launch in 2017).

“Despite being a mature player in the online clothing market, Asos has reported another fantastic set of results,” Willmott said.

“Asos’s broad product range sold on local language and currency platforms, along with its aggressive delivery proposition and responsive pricing, allows it to steal market share from well-established international and local players.”